Categorized Glossary

This glossary groups terms by their role in a transaction. Definitions use plain English; actual rights and obligations depend on applicable requirements and the governing documents.

Regulation A and Offering Terms

Term Plain-English definition

Regulation A An exemption from Securities Act registration that permits eligible issuers to conduct public securities offerings under specified requirements.

Regulation A+ The commonly used name for Regulation A following its expansion under the JOBS Act. It is not a separate exemption.

Tier 1 The Regulation A tier generally permitting offerings of up to $20 million in a 12-month period, subject to applicable requirements.

Tier 2 The Regulation A tier generally permitting offerings of up to $75 million in a 12-month period, subject to applicable requirements.

Exempt public offering A public securities offering conducted under an exemption from registration. “Exempt” does not mean free from disclosure, antifraud, or other applicable requirements.

Issuer The legal entity that issues a security and bears the obligations established by its terms.

Offering A proposed or actual sale of securities under defined terms. Form 1-A The offering statement submitted to the SEC for a Regulation A offering. It includes disclosures, financial information, and exhibits.

Offering circular The Regulation A disclosure document explaining the issuer, securities, offering terms, use of proceeds, and material risks.

Preliminary offering circular An offering circular used before qualification, subject to the applicable requirements.

Filing Submitting documents to the SEC. Filing alone does not permit Regulation A sales.

Qualification The SEC action permitting sales under a Regulation A offering statement, subject to applicable requirements. It is not an endorsement of the investment.

Testing the waters Soliciting indications of interest in a potential offering under specified communication requirements.

Indication of interest A nonbinding expression of possible interest in an investment. Subscription agreement An agreement through which an investor applies or agrees to purchase securities under the offering’s terms.

Closing The event at which applicable conditions are satisfied and a securities purchase is completed.

Use of proceeds How the issuer plans to use the money raised. Gross proceeds Total funds raised before offering expenses.

Net proceeds Funds remaining after offering expenses. Selling securityholder An existing holder selling securities in an offering. Proceeds from that holder’s sale generally go to the holder rather than the issuer.

Ongoing reporting Reports an issuer must provide after an offering under the applicable framework. Form 1-K The annual report used by Regulation A issuers subject to that reporting requirement.

Term Plain-English definition

Form 1-SA The semiannual report used by Regulation A issuers subject to that reporting requirement.

Form 1-U The current report used by Regulation A issuers to report specified events. Tier 2 generally requires audited offering financial statements and ongoing reporting. Different treatment can apply to issuers satisfying applicable Exchange Act reporting requirements. Investor limits and other conditions also require transaction-specific review. [R01]

Investors and Securities Rights

circumstances. Accredited investor An individual or entity meeting specified regulatory criteria based on financial circumstances, qualifications, or other characteristics.

Non-accredited investor An investor who does not meet the applicable accredited-investor criteria. Tier 2 investment limit For applicable non-accredited purchasers, generally a limit of 10% of the greater of annual income or net worth for individuals, or annual revenue or net assets for entities. An exception applies to securities to be listed on a national securities exchange upon qualification.

Affiliate In securities-law contexts, a person or entity in a control relationship with another entity. The relevant definition and consequences depend on context.

Record holder The person or entity identified as the owner in the issuer’s official ownership records.

Beneficial owner A person enjoying the economic benefits of securities held through an intermediary, such as a broker. Specific legal definitions can differ by context.

Street name An arrangement in which securities are registered in an intermediary’s or nominee’s name for the beneficial owner.

Voting rights Rights to vote on matters specified by law and the security’s governing terms. Information rights Rights to receive specified reports, records, or other information.

Transfer restrictions Conditions limiting whether, when, or to whom a security can be transferred. Redemption Repayment or repurchase of a security under its governing terms.

Conversion Exchanging a security for another security under specified terms. Investor eligibility Requirements determining whether a person may purchase, hold, or trade a particular security.

An intermediary holding arrangement can separate the beneficial owner from the registered holder. Tokenization must be evaluated within that ownership structure. [R49]

The Five Investment Structures

Structure Definition Potential issuer benefit Principal tradeoff

Tokenized secured notes Debt securities digitally represented through tokens and supported by specified collateral arrangements.

May raise capital without issuing equity and provide defined repayment terms.

Repayment obligations, collateral commitments, and possible enforcement after default.

Royalty-linked instrument An investment whose payments depend on defined royalties, revenue, or another specified commercial measure. Its legal form must be established.

May connect financing to commercialization or a revenue stream without issuing shares.

Sharing future economics, calculating payments, and maintaining reporting.

Tokenized preferred shares Preferred equity represented through digital tokens, with rights established by the governing documents.

Allows negotiated dividend, priority, voting, conversion, or other terms.

Equity dilution and preferences that can affect existing holders.

Tokenized

Tokenized parent-company shares Equity issued by the parent company and represented digitally.

Raises capital directly at the parent level.

Parent-level dilution and applicable corporate, securities, and exchange requirements.

These categories overlap. An IP subsidiary, for example, could issue preferred shares. Tokenization describes the digital representation; it does not determine whether the instrument is debt or equity.

Debt, Collateral, and Creditor Rights

agreement. Enforcement Exercising legal or contractual remedies after a triggering event.

Recovery value The amount reasonably expected to be obtained from assets or claims in an enforcement or liquidation situation.

Guarantee A separate commitment by a guarantor to satisfy specified obligations. Its scope and value depend on its terms and the guarantor’s ability to perform.

Key distinction: A token does not create collateral rights by itself. Those rights require the applicable legal arrangements.

Equity and Ownership

Term Plain-English definition

Equity An ownership interest in an entity. Common shares Equity generally participating in the company’s residual value after obligations and applicable preferences.

Preferred shares Equity with specified preferences or other negotiated rights relative to common shares.

Dividend A distribution to shareholders under applicable law and governing terms. Cumulative dividend A dividend that accrues when unpaid under its terms. Accrual does not guarantee ultimate payment.

Noncumulative dividend A dividend that generally does not accumulate when unpaid, as established by its terms.

Liquidation preference Specified payment priority in liquidation or another event covered by the documents.

Convertible security A security that can or must become another security under defined conditions. Warrant A right to purchase specified securities at a defined price during a specified period.

Dilution A reduction in an existing holder’s percentage ownership or other economic interests resulting from issuance or capital-structure changes.

Capitalization table A record of ownership and securities outstanding, often including rights to acquire additional securities.

Authorized shares Shares the company is permitted to issue under its governing documents. Outstanding shares Shares issued and currently outstanding.

Fully diluted calculation A calculation incorporating specified potential issuances, such as conversions or exercised warrants. Assumptions must be identified.

Parent company A company controlling another company or companies. Subsidiary An entity controlled by another entity.

Intercompany agreement An agreement between related entities, such as a parent and subsidiary. Key distinction: Preserving parent share count does not necessarily preserve the parent’s ownership of a subsidiary or its participation in subsidiary economics.

Intellectual Property and Other Assets

works. Trade secret Information deriving economic value from secrecy and protected through reasonable measures to maintain secrecy.

License Permission to exercise specified rights under agreed conditions. Licensor The party granting a license.

Licensee The party receiving a license. Royalty A payment tied to the use, sale, or commercialization of specified rights or products.

Assignment A transfer of ownership or other specified rights. Chain of title The documented sequence through which ownership or rights passed between parties.

Recordation Recording a document with an appropriate registry or office. Its legal effect depends on the document and applicable law.

Commercialization Turning an invention, product, or right into commercial activity. Real-world asset, or RWA An industry term for an asset or right connected to an underlying business, property, or financial arrangement rather than existing solely as a native digital token.

Asset ownership Legal ownership of property or rights. Economic exposure Participation in gains, losses, or payments associated with an asset without necessarily owning it.

Due diligence Investigation of information relevant to a transaction. Key distinction: Owning shares in an IP-holding company is different from directly owning its patents.

Valuation, Accounting, and Financial Measures

Term Plain-English definition

Economic value An estimate of benefits an asset or business may provide under specified assumptions.

Valuation An estimate of value using identified methods, evidence, and assumptions. Appraisal A valuation analysis prepared for a defined purpose.

GAAP Generally Accepted Accounting Principles: the accounting framework used for U.S. financial reporting.

Recognition Including an item in financial statements when the applicable accounting criteria are satisfied.

Measurement Determining the amount at which a recognized item is reported. Carrying amount The amount at which an item is reported in the financial statements.

Book value An accounting amount; the precise meaning depends on whether it refers to an asset, equity, or another measure.

Intangible asset An identifiable nonphysical asset, such as certain recognized IP rights. Not every economically valuable intangible is recognized on the balance sheet.

Goodwill An accounting asset generally arising in a business combination when the purchase consideration exceeds the relevant identifiable net assets under applicable rules.

Fair value Under applicable accounting guidance, an exit-price measurement based on an orderly transaction between market participants at the measurement date.

Impairment An accounting reduction when an asset fails the applicable recoverability or valuation requirements.

Amortization Allocating the cost of certain assets over their useful lives. Mark-to-market A common expression for updating amounts to current market-based values where the applicable framework requires or permits it.

Market capitalization Generally, common-share market price multiplied by outstanding common shares.

Enterprise value A valuation measure commonly combining equity value and debt, less cash, with other adjustments depending on the methodology.

Cash flow Cash entering or leaving a business during a period. Forecast An estimate of future results based on assumptions.

Audit An independent examination providing reasonable assurance about whether financial statements are free from material misstatement.

Key distinction: An appraisal, a balance-sheet amount, and market capitalization can differ because they measure different things. Tokenization does not make those amounts interchangeable.

Tokenization and Blockchain Technology

actions. Minting Creating tokens through the system’s authorized process.

Burning Removing tokens from circulation through the system’s process. Burning alone does not necessarily extinguish the associated legal rights.

Reconciliation Comparing records and resolving differences between them. Interoperability The ability of different systems to exchange information or operate together.

Fractionalization Dividing an interest into smaller units, where the legal and operational arrangements support it.

Tokenization models

intermediary. Synthetic exposure An arrangement producing economic results linked to another asset without granting direct ownership of that asset.

Linked security A security whose return depends on another security or specified events, while representing an obligation of the linked security’s issuer.

These models can create materially different ownership and counterparty arrangements. The SEC staff statement describes those distinctions. [R02]

Trading, Transfer, and Settlement

transactions. Alternative trading system, or ATS A trading system operating under an applicable exemption from national securities exchange registration and associated requirements.

National securities exchange A securities exchange registered with the SEC, such as NASDAQ or NYSE. Order An instruction to buy or sell under specified conditions.

Bid A quoted price at which a participant is willing to buy. Ask A quoted price at which a participant is willing to sell.

Spread The difference between bid and ask prices. Execution Completing the matching or acceptance of a trade under the venue’s procedures.

Clearing Processes used to establish and manage obligations arising from trades. Settlement Completing delivery of the securities and payment under the applicable arrangement.

Counterparty The participant on the other side of a transaction. Liquidity The practical ability to sell within a reasonable time at an acceptable price.

Transferability The ability to transfer a security under applicable legal, contractual, and operational conditions.

Price discovery The process through which market activity provides information about price. Trading volume The quantity or value traded during a specified period.

Market maker A participant that provides buy and sell quotations under the relevant market arrangements.

DTC The Depository Trust Company, a securities depository supporting custody and settlement arrangements for participating securities and institutions.

Key distinction: Permission to transfer and access to a venue do not guarantee a buyer or a sale price.

Service Providers and Operational Roles

Term Plain-English definition

Platform A system through which users access technology, information, or coordinated services.

Brand The name used to present a business or service publicly. Legal entity The organization that enters agreements and assumes defined obligations.

Technology provider An organization supplying software and technical infrastructure. Broker-dealer A securities firm acting as a broker for others, a dealer for its own account, or both.

Underwriter A participant in securities distribution whose obligations depend on the arrangement.

Best-efforts arrangement An arrangement to use the agreed efforts to sell securities without necessarily purchasing unsold securities.

Firm-commitment underwriting An arrangement under which the underwriter agrees to purchase securities for resale, subject to contractual conditions.

ATS operator The legal entity responsible for operating an ATS under the applicable framework.

Transfer agent A provider maintaining security-holder records and processing specified issuance, ownership changes, and other functions.

Custodian A provider safeguarding specified assets under an agreed arrangement. Escrow agent A party holding funds or property until specified conditions are satisfied.

Paying agent A party administering payments using funds supplied under the arrangement. Securities counsel Lawyers advising on securities structures, disclosures, and applicable requirements.

Auditor An independent professional or firm engaged to audit financial statements. Valuation specialist A professional evaluating value using identified methods and assumptions.

Service agreement A contract defining services, responsibilities, fees, and other terms. Corporate action An event affecting securities or holders, such as a dividend, conversion, redemption, or stock split.

Transfer-agent functions are distinct from trading and custody services, even when providers coordinate through one platform. [R50]

Public-Company Filings and Governance

Form 10-K An annual report containing business, financial, risk, and other required information.

Form 10-Q A quarterly report containing financial information and other required updates. Form 8-K A current report used to disclose specified events.

Proxy statement Information supplied in connection with shareholder voting, often addressing governance, compensation, and proposals.

Form S-1 A general registration form used for securities offerings. Form S-3 A registration form available to issuers and transactions meeting specified requirements.

Exchange listing requirements Conditions imposed by an exchange for listing, continued listing, and specified corporate actions.

Shareholder approval Approval by holders under applicable law, governing documents, or exchange requirements.

Board approval Authorization by the board of directors within its authority. Regulation FD Fair Disclosure rules addressing specified selective disclosures by covered issuers.

Material information Information important enough to affect a decision under the applicable legal standard.

Material nonpublic information, or MNPI Material information that has not been made publicly available.

SDR Workflow and Communication

service. Prospect A company or contact being evaluated as a possible customer.

Business trigger An event creating a reason to consider financing or related services. Discovery A conversation used to understand objectives, circumstances, constraints, and participants.

Commercial qualification Deciding whether an opportunity warrants further evaluation. Legal eligibility Whether an issuer or transaction satisfies applicable legal requirements.

Decision group People influencing or authorizing the transaction. CRM Customer relationship management system used to record contacts, discussions, and next steps.

Data room A controlled collection of transaction documents. Nurture Appropriate follow-up until a defined timing or readiness condition changes.

Handoff Transfer of relevant facts and unresolved questions to the next team. Escalation Routing an issue to someone with the expertise and authority to resolve it.

Approved material Content authorized for a specified audience and use through the applicable review process.

Verified fact Information supported by an identified reliable source. Management statement Information supplied by company representatives that may still require verification.

Estimate An approximate amount or schedule based on stated assumptions. Hypothesis A possibility requiring investigation.

Compliance Following applicable requirements and organizational policies. Supervision Oversight of people, activities, and communications.

Commonly Confused Terms

rights. Asset ownership / economic exposure Participation in an asset’s results does not necessarily mean owning it.

Valuation / accounting recognition Estimated economic value differs from eligibility for balance-sheet recognition. Book value / market capitalization Accounting amounts differ from market-priced common-equity value.

Collateral value / recovery value An appraisal can differ from proceeds obtainable after default. Transferability / liquidity Permitted transfers differ from the practical ability to sell.

Trading admission / execution Venue access differs from completing a transaction. Wallet / custody Blockchain access tools differ from the complete safeguarding arrangement.

Platform brand / legal operator Marketing identity differs from the entity responsible for a service. Parent share count / subsidiary ownership Unchanged parent shares can coexist with reduced ownership in a subsidiary.

Stated dividend / guaranteed payment A dividend term does not eliminate payment conditions or financial risk.

Gross proceeds / net proceeds Total funds raised differ from funds available after expenses. Commercial qualification / legal eligibility An opportunity worth investigating is not an approved transaction.